Why AI Is Not Going To Make You Rich And What To Do Instead

0:00How's the new place? Get your Wi-Fi figured out? I got T-Mobile 5G home internet and I'm loving it. It's the fastest 5G home internet. My old provider was so slow. Mine is slow. And only 35 bucks a month. Do I need to try this? Try it for 15 days. Love it or get your money back. I love it already. There are over 250 reasons to join T-Mobile. Find yours and check availability at t-mobile.com slash home internet. That's this according to Oculus V test intelligence. Date a second half of 2025. All rates reserved for T-Money back guarantee within 30 days of cancellation. Mazda has been named Consumer Reports' safest new car brand.

0:36It starts with our approach. Every Mazda comes standard with proactive safety features. So you're more aware of what's around you, more focused on the road ahead, and ready before problems ever start. Mazda. More of what matters most to you. Go to mazdausa.com to learn more. Consumer Reports does not endorse or promote any product. Did you know that 95 % of companies that rolled out AI last year got zero financial return from it? Yeah, if you haven't been told this yet, I'm here to tell you, you don't need to use AI for everything. In fact, I encourage you not to use AI for most things as a founder of your company.

1:19Why? And by the way, this is the biggest takeaway of the whole episode. And that's because the thing that actually makes you money, AI can do. And that's making insightful decisions. The things that come out of your head, the ideas that are implemented in your business are the things that actually make you rich, not what AI can do. Listen, I get it. Every business is feeling the same pressure. They feel like they have to use AI or they're gonna get left behind. But AI is just a tool. It's a worker. It's just like hiring somebody on your team to do a job. It's not a creator of ideas. Your judgment is your taste.

1:57and your taste is what makes your business and your product and your offer special. That is what's going to make you money. And this is why I say you should never outsource that. You actually don't need to use AI for any of that. Today, I'm gonna share with you the hard, cold facts, the data on why the AI gold rush is actually failing. And plus, how to use AI the right way in your business so that you could leverage its power without losing your power as the founder. Let's go.

2:32Welcome back to the$100 MBA show. I'm your host, Omar Zinhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday to help you start, grow, and scale your business. I got a quick favor to ask. If this show has helped you in any way, leave me a quick review. You could do so wherever you listen to podcasts. This helps me and my team reach even more people who need the same no-fluff practical business advice that you're getting from the show. It only takes a few seconds, but it makes a huge difference. Thanks for being a part of our journey to help others on their journey.

3:09There's a trend online right now that AI is like the silver bullet. It's going to solve all your problems. No, you need a product, right, in your business that solves a problem for your customers. Instead, you're being sold this idea that you need AI in everything you do. You need AI in the product itself and you need AI in the way you deliver your product. No, AI is just a tool, just like a microwave. A microwave will cook your food fast, but it can't come up with a recipe. It can't decide which ingredients go better together. It can't taste the dish itself to find out if it needs more salt or whatever it might be.

3:44A microwave is just a tool to cook things faster. And by the way, you can use the oven. The oven still works, right? The oven will still cook the food and it might even do a better job. So you need to see AI the same way. It's a tool that will help you produce something, but it's not going to produce the secret sauce. It's not going to come up with the actual formula of a great product. Listen, I've done more than one episode on how to build a software or a product through software with AI. And listen, AI can build me a software. It can do the grunt work for me and write the code. But what does the software actually do?

4:21What problem does the software actually solve? Who does it serve? Why would anyone pay any kind of money for that piece of software? That's my job as the creator of my business, as a creator of the product, is to answer those questions, not the AI's job. And that job and those answers to those questions is what's going to make you rich. That's what's going to make the money. The person that solves the problem better than others is going to get the lion's share of the market. It's going to actually make the money that you're searching for. But AI is not going to come up with these ideas for you.

4:57They're not going to be able to understand the customer as much as you'll understand the customer. Yes, it could do some legwork for you. Yes, it could do some research. But at the end of the day, you need to make the decisions. You need to apply your taste and your discernment to make the right thing for your customer. Listen, we're going to geek out a little bit with some numbers, with some data. We're going to talk about what's going on right now in AI and how the gold rush is already failing for the market. MIT, this is a very interesting study I want to share with you in 2025, recently, just last year.

5:27They analyzed over 300 AI adoptions across companies. So 300 different companies adopted AI in their business. 95 % of these businesses rolled out AI and got zero measurable financial return, meaning they didn't make any more money when they applied AI and used it in their business. Only 5 % of those 300 companies actually created real value through AI. And$30 to$40 billion were invested through these companies. Almost nothing to show for it. Sometimes as humans, we just see something in the news. We see something that's going on in the media. We get hyped up. We think, oh, there's an opportunity here.

6:11I should just jump on it. I should just do what everybody else is doing so I don't miss out. But we don't really evaluate if it's actually adding value to our business, to our lives, to our customers. And this is what today's episode is all about. So look at the numbers for what they are and understand how we can use this technology to actually help us so that we're one of the 5%. Here's the crazy thing about this study by MIT. What they found out is that the companies that failed, they didn't fail because of the technology itself. The models, the AI models, they actually work. They're fine. But the failure was the learning gap.

6:43People didn't know how to use these models. They just thought that chat GPT is going to solve their problems, right? They're just going to do the work for them. But you need to do something to make sure that the tool actually works for you. Just like I can't just buy a hammer and expect that all the pictures in my house are going to get hung up automatically. No, I have to apply the hammer. I got to use the hammer. I got to hammer some nails into the wall, figure out where these photos or where these pictures should be hung in my house. What's the best placement? I got to make sure it's straight.

7:12All this stuff, right? People are just relying on AI to solve the whole problem when AI is just a tool to help them through the process of building their product, of solving problems for their customers. So you need to understand that if you want to leverage AI, you got to say, what's AI good at? How can I use AI to do that for me? whether it's cleaning up my copy, whether it's proofreading my work, whether it's writing code for an idea that I have come up with. We're going to talk more in detail later about that, but that's a great takeaway from that study, that the people that actually made it work understand how to use AI to be able to leverage their productivity.

7:49What about startups that are built on AI, like AI-driven startups, startups that use the technology of AI as their value proposition, as the reason why you should buy the product in the first place. Well, 80 to 95 % of all AI wrapper startups fail. It's pretty crazy. And when I say AI wrapper startups, that's people that are using like the technology of ChatGPT or Claude and just putting a wrapper around it, putting an interface, putting a unique angle and saying, yep, here we go. This is a new product. Well, they actually fail because people realize I could just use ChatGPT without using this new product.

8:25They kind of shoot themselves in the foot. And actually 60 to 70 % of these companies generate zero revenue, zero. They're not even profitable. They're not even making a dollar. And only three to 5 % of them reach$10 ,000 on monthly recurring revenue. So as you can see, it's not a silver bullet. The numbers don't lie. The average churn of these companies, of these AI rapper companies are 65 % within 90 days. This is outrageous. That means at the end of 90 days, 65 % of the customers that they got in those 90 days leave. So they're constantly working with a leaky bucket, right? They're not keeping any customers.

9:02You know, it was crazy because when I was running my software company, Webinar Ninja, our churn was at 7%, not 65%, 7%. And we were unhappy. We're like, this is too high. And we cut it down in half and got it down to 3.5%. The point here is that you've got to keep the customers because you work so hard and spend so much money to earn a customer, to bring them into your business that you don't want them to leave. You want them to continue to pay month over month, but 65%, that's absolutely insane. Today's episode is supported by Hostinger. I don't know about you, but I got way too many logins for all the tools I need to run my business.

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11:33Try Quo for free, plus get 20 % off your first six months when you go to Quo.com slash M M-B-A. That's q-u-o.com slash M-B-A. So are all AI startups doomed? Well, actually, there's a right way to do this and a wrong way. And I'm going to give you two case studies, two examples to know what to do and what not to do. The funny thing is that the example of what not to do is a company I actually know. I know the founders of this company. I met them back in 2020. It's a company called Jasper. And they were a very, very powerful AI copywriting tool. They were like an early adopter of AI. They were kind of the poster child of generative AI when everything was kind of booming.

12:14And in 2023, their company was making$120 million in revenue every year. OK, the valuation of the company was$1.5 billion. So they were considered a unicorn. I mean, founders everywhere were pointing at Jasper and saying, see, you can build a massive business building on LLMs, meaning that they used the technology of OpenAI, of clawed in the back end and allowed people to have like a nice interface through Jasper to be able to write great copy, copywriting, sales copy for businesses. Then ChatGPT happened, right? ChatGPT came on stage and they totally destroyed their business. The revenue collapsed roughly 35 to 55 million.

12:54So it was a decline of 53 % massive, like in one year. Think about that. Layoffs, slashing of forecasts. There was a lot of turmoil happening in the business and the users started to realize that they could just use ChatGPT instead of Jasper for about 80 % of the tasks they wanted to do. Now, the lesson that you can learn from Jasper's experience is that if your entire business is the AI, you are renting your business from OpenAI or Claude or whatever tool you're using in the background. And the landlord can just evict you at any time when they just make an update, when they decide, hey, I like what this person is doing with this company.

13:32We're just going to add that as a feature inside of ChatGPT or inside of Claude. Now, let's go to the flip side. Let's give you an example of a company that did it right. There's a company called Cursor. It's very popular in the vibe coding world. Cursor is basically an interface, a tool that you can use to be able to code and create software by just writing some prompts or writing English words, like saying, create me a software that does XYZ. And then it uses the technology of OpenAI and Claude in the background. Technically, this is also a wrapper, but the same basic architecture of what we talked about in Jasper.

14:07And they've crossed roughly$2 billion in annual revenue. This is how much money they're making every year, $2 billion. Why? Why is this a completely different outcome than Jasper? Because the AI was never the actual product. What's the product that they're offering is an interface that's easy to use so that you can be able to code and ask questions about the code and fix bugs and be able to add features quickly and then use the power of the AI of those models in the background. Tool, different thinking, opposite result. And another example is the company that I ran and sold, Webinar Ninja. Webinar Ninja is not the first webinar software.

14:47We didn't invent webinar software. The actual technical software or technology was called WebRTC, which was like low latency video, right? But we created an interface and an experience for our customer that was different from what's out there. People don't want to create landing pages. They don't want to create the actual chat experience or creating an offer or automatic emails. We did that for them. And that's why we were valuable. Hey, I hope this episode is cutting through the noise, giving you a little bit of a wake up call that you don't need to use AI for everything. If so, I want you to subscribe because we have an upcoming episode I don't want you to miss.

15:23And it's actually pretty interesting. This episode is all about why the best way to master anything isn't through video. Yeah, I'm saying this as somebody who runs a YouTube channel and has published over 500 videos in my lifetime. Yeah, video is good for certain things, but if you want to learn something really deeply, not the best way. And I'll explain why. Subscribe so you don't miss it. So where does AI actually belong in your business? I want to be super clear about this. I'm not anti-AI. I actually use AI a lot in my daily life, in my work, but I use AI like I use a washing machine. It's a brilliant thing to do repetitive, boring tasks.

16:04I don't want to wash my clothes manually, whether it's in the tub of my bathroom and scrubbing my clothes and washing them and rinsing them and then having to wring them out and then hanging them up. No, a washing machine does all that grunt work for me. And I look at AI the same way. It genuinely will speed up your work by doing a lot of things autonomously, a lot of mundane work. But right now, it's not going to replace you as the creator. You have to tell the AI what to do. And what to do is everything. You have to see your work as two different things. As thinking, as planning, as ideation, and then there's implementation.

16:44AI is great for the implementation. Not so great for the thinking and the planning and the ideation. This is where you come in, right? Where you come up with the ideas, you come up with the solutions, you come up with the direction you wanna move in. And then once you make a decision, then you go ahead and you tell them to go ahead and implement through AI. Another way I learned this back in the day is the concept of, as an entrepreneur, you have to have two hats. The first hat is the CEO mode, where you are making decisions, where you are thinking deeply about the solution to the problems you're trying to solve.

17:16And then you have a different hat called the worker bee mode, where you just go ahead and implement the decisions that you made earlier. I learned this from a buddy named Chase Reeves. Chase Reeves has a great YouTube channel if you want to check him out. But it's a great concept. And now you can use this concept with AI, where you have to put on your CEO hat, make decisions, come up with the ideas, come up with the concepts. And then when it's time to be worker bee, when you're in worker bee mode, this is where AI can help you a lot to just implement the decisions that you have already made. So what are some examples?

17:46Well, for example, I'm running a Christmas party. A Christmas party for entrepreneurs is called the Crazy Ones Christmas Party. And I need to send an email out to all the people I want to invite. Now, I have some good ideas of how I want to write this email. And I have some, maybe some witty lines I want to include. And there's a tone and there's some things I want to make sure I mention, like the link to RSVP and the dates and what we're going to do during the party. And I dump all this stuff in a document. And then from there, I can give it to AI to say, hey, clean this up for me so that it's a cohesive email.

18:18It could draft this email for me. And it comes back with a great drafted email in seconds. Okay. And then once I have that email, I can go ahead and modify it. So it sounds like me. So I'm happy with it. So it doesn't look cheesy or, you know, it doesn't sound like my voice. And then I just pop that into my Gmail and I send the email. That saves me a ton of time because I'm not so good at the details. I'm not so good at typos. If you know me personally, you know that I'm the typo king. So this is a great example, drafting emails. It's also great at writing code. I mentioned this several times on this podcast.

18:51My user experience is fantastic when it comes to asking AI to come up with great software for ideas I came up with, with decisions that are driving the AI. It's also good for repurposing content, like stripping a transcript out of audio or video. It's great at summarizing a meeting. Like if you record a meeting with using a tool like Granola, for example, great at summarizing what was said and what are the to-dos. Again, this is great for boring tasks you don't want to do, grunt work. But when it comes to coming up with what you're going to talk about in that meeting, that is your job as a leader.

19:30Notice the pattern of all these examples. I bring the judgment, AI brings the grunt work. I come up with the decisions. I come up with the ideas. AI then rolls up the sleeves and does what I tell it to do. And this is one of the most important parts of the whole episode, okay? The reason why I'm pushing you to do this is that decision-making is a muscle. You don't want that muscle to fatigue. You want to continue to use your decision-making muscles in your head so that you get better and better at it. And you don't just delegate decision-making to AI because as soon as you do that, it's a slippery slope.

20:05and you are able to make really tough decisions in your business. I have to say through the failures I've had, through the tough days I've had, through my 20 years of entrepreneurship, the best thing I got out of it is that building of that muscle of being able to make decisions and also make decisions quickly without second guessing myself. So here's your prescription. Start with the problem, not the tool. Every time you are starting any kind of business, starting any kind of project, never ask, how can I use AI in my business? No. Ask what painful problem do I solve? Who do I solve it for? And then ask, does AI help me deliver this faster, better?

20:42If so, then I will use AI. If not, you don't have to use it, right? You're not obliged to use AI in everything. The tool comes last, always. The solution, the decisions, the problems that you're trying to solve, these are top of mind. These are the things that you are going to deal with. Number two, if you're building a company, a product, a service using AI, you're AI powered, right? You want to make sure you ask yourself one question. Let's say, for example, the models that you're using inside this product, if you're using OpenAI or Claude or whatever it might be, if those companies just shipped your product as a new feature next month, would your customers cancel your service?

21:23Would they cancel your product? If Claude all of a sudden started doing what your product does, would they cancel? or do you create some sort of uniqueness in your business? And I'll give you an example. I had a hobby project. I created a product called Spoken, spokenhq.com if you wanna check it out. And this is a product that I don't really sell. I just created it for fun. But what it does is that it reads out your newsletters. It's a little widget that you can add to your newsletters where people can click a play button and they can hear somebody read an AI or yourself, your voice or an AI version of yourself reading out emails.

21:59Now, the reason why I created this product is because I thought that a lot of people might be busy. They don't read your emails or newsletters. And a good idea is just to get somebody to read it out to them. Maybe they're driving, maybe they're eating their breakfast, and it's a time saver. Now, why does this have a moat around it? Because there's very low chance that Claude or ChatGPT is going to create this as a feature where it's like you can copy and paste something and then create some code and put it inside a newsletter and be able to read out any text. It's a little bit far-fetched. Why?

22:30Because it's very niche. I'm solving a specific problem for people that send out newsletters. It's not as general as what ChatGPT or Claude normally does for their customers. So this is what I mean by creating a moat. And a good way to do this is to niche down, is to just serve a specific problem or pain for a specific customer. Next, I want you to start thinking as using AI as leverage and not as your product itself. I'm not selling AI. I use AI to serve people better and faster. That's a good way to look at it. That's the difference between the 5 % and the 95 % that we saw from the MIT study.

23:06So use AI as leverage to help do what you normally do using your expertise better. And lastly, you want to protect and sharpen your judgment. You want to read. You want to study your customers, Talk to your customers. Make that hard call and speak to them and find out why are they using your product or service? Why did they cancel your product and service? What are they using instead? How are they solving this problem now that they're not using you? These questions, these conversations are gold because they're going to help you create better solutions for your next customer and the customer after that and the customer after that.

23:40I have to say that those conversations that we've had over the years through any product that we sold have helped us tremendously be able to create a better solution for customers. Maybe not the customers that left, but the customers that will come in the future, they're going to think twice before canceling because we're solving their problem completely. To wrap up, I just want to say a few things. Yes, AI is incredibly powerful. I think AI is one of the most powerful tools ever handed to entrepreneurs. And that's exactly why it will not make you rich, because it's just a tool. It's up to you to come up with the solutions, up to you to come up with your own discernment, your own taste.